- Belize-based incorporator pleads guilty to conspiracy charge
- One-time Canadian dentist turned dealmaker faces 20 years
A former dentist who ran an incorporation services firm in Belize pleaded guilty to conspiring to launder $250 million in proceeds from securities fraud, marking the biggest conviction yet in a new wave of investigations into businesses that help hide money offshore.
Robert Bandfield, 71, pleaded guilty to a single conspiracy charge on Monday in Brooklyn federal court, just a little more than week before he was scheduled to go to trial, and before U.S. District Judge Leo Glasser could rule on a request to throw out much of the evidence in his case.
In his challenge, which threatened to create complications for other U.S. probes overseas, Bandfield argued that the U.S. directed Belize agents to conduct a search at his offices that violated his constitutional rights. Prosecutors said the matter was handled appropriately.
Bandfield, his company IPC Corporate Services Inc., three brokerages and six other individuals were charged with helping clients profit from penny stock pump-and-dump scams and laundering the profits through offshore entities. For instance, a Belize-based firm with virtually no assets, Cynk Technology Corp., rocketed to $6 billion in market value for a brief period in 2014, a pump-and-dump that Bandfield and his co-defendants helped orchestrate, according to prosecutors. The stock price eventually dropped again, and now the company is worth $29.1 million.
Bandfield was accused of leading the operation. In 2013 he boasted to an undercover investigator posing as a client that he had incorporated more than 5,000 offshore corporate structures to hide his clients’ assets, prosecutors alleged.
Standing in oversize khaki jail clothes before a judge at a hearing Monday, Bandfield admitted to the allegations.
“I know what I did was wrong, and I sincerely regret these actions,” he said.
Bandfield used shell companies incorporated in Nevis to hold Belize companies because the law there “imposes significant barriers” on regulators, the Securities and Exchange Commission said in a civil lawsuit based on the same allegations as the criminal case. A man who worked for Bandfield told the U.S. agent it would take about eight years for authorities to identify the true owner behind a entity, the agency said.
“The client ‘never controls anything,”’ Bandfield told the agent, according to the SEC’s complaint. “Control is a bad word around here.”
Bandfield, a U.S. citizen who graduated from dental school in Oregon in 1969 and practiced in Canada before moving to Belize, was arrested at a Miami airport on Sept. 9, 2014. He has remained in U.S. custody since then. Two other individuals charged with him have pleaded guilty, and the rest remain fugitives.
While working in Canada, Bandfield dabbled in real estate investments before making the move to a tropical locale, according to a dentist who practiced with him in British Columbia.
Bandfield filed for bankruptcy in 1992 in Oregon, according to court records. The year before, he established International Privacy Corporation, which marketed itself as “confidentially providing offshore services since 1991,” according to a cached version of its defunct website.
The arrest of the former dentist came amid a wave of aggressive probes into so-called “incorporators,” who allegedly help investors stash money in offshore business structures to avoid taxes or to remain anonymous. In at least three cases targeting incorporators over the last three years, investigators used undercover investigators to gather evidence that the businesses were aware of laundering proceeds of fraud.
On the same day as Bandfield’s arrest, police in Belize raided his office, as well as offices of the brokerages charged along with him, and hauled off more than 200 cartons of records -- or, as defense lawyers said, “virtually everything that was not nailed to the floor.” The records were later given to American prosecutors, the lawyers said.
At a hearing in April, the FBI agent who oversaw the case, Thomas McGuire, said he wasn’t involved in the search in Belize and didn’t see documents until he later traveled there. But Bandfield’s lawyers say in filings that e-mails from days before the search indicate that McGuire and other U.S. officials knew it was about to occur.
Described as an “architect of an offshore fraud haven” by Brooklyn U.S. Attorney Robert Capers in a news release Monday, Bandfield aided in the manipulation of at least 40 thinly-traded stocks in addition to Cynk, and helped conceal assets for more than 100 U.S. citizens and residents. Bandfield also helped U.S. clients evade reporting requirements to the U.S. Internal Revenue Service, prosecutors alleged.
Bandfield is scheduled to be sentenced Sept. 1 and faces a prison term of as long as 20 years.
The criminal case is U.S. v. Bandfield, 14-cr-00476, and the SEC case is SEC v. Bandfield, 1:14-cv-05271, U.S. District Court, Eastern District of New York (Brooklyn).